HELOC LTVs Could Drop From 80% to 65%

[bizaro86]

Originally Posted by GP_Matt

I have never tried, but can you get a second mortgage for the HELOC amount?

Ask me if they change the rules

Off the top of my head, I'm pretty sure the answer is yes, but it would be at a higher interest rate than the HELOC. If it comes to that, I'll do the math on paying the penalty vs doing a second.

[Red]

Maybe the banks are preparing for a RE downturn in excess of 30%?

With the population maxed on credit and housing stagnant the HELOC is not going to keep the economy going any longer.
The HELOC gave them a decade of huge consumer spending. Time to let people save a bit and learn again what cash is.

This is good news.

[oilyfan]

The latest news: http://www.canadianmortgagetrends.co...-concerns.html

Looks like the 65% HELOC is a go. But other rules remain looser.

[JimmytheT]

Originally Posted by bizaro86

Can I assume you didn't get those recently?

There is an Alberta based FI right now offering HELOCs at Prime - 0.5%

[Deegee]

Originally Posted by JimmytheT

There is an Alberta based FI right now offering HELOCs at Prime - 0.5%

That's only for a year. Then the rate goes up.

[Deegee]

Sidebar: OSFI’s new mortgage policies are drafted for federally regulated lenders only, but regulators in certain provinces might also adopt them.

So I wonder if this means ATB Financial and Credit Unions will be able to make their own decisions on LTV?

[chemgear]

http://www.canadianmortgagetrends.co...-concerns.html

Contrary to some fears, mortgage holders in good standing will not have to be re-approved at renewal if they stick with their existing lender.

The maximum loan-to-value on HELOCs will be cut from 80% to 65%.

OSFI will not require that HELOCs be amortizing.

[ranchlandsselling]

Originally Posted by chemgear

http://www.canadianmortgagetrends.co...-concerns.html

Contrary to some fears, mortgage holders in good standing will not have to be re-approved at renewal if they stick with their existing lender.

The maximum loan-to-value on HELOCs will be cut from 80% to 65%.

OSFI will not require that HELOCs be amortizing.

That's annyoing. Borrowers in good standing can now be held hostage by their current lender. What's that little home owner? You don't like the rates I offered you ? Go elsewhere then! BAH HAHAHAHA

[chemgear]

Originally Posted by ranchlandsselling

What's that little home owner? You don't like the rates I offered you ? Go elsewhere then! BAH HAHAHAHA

Isn't that the situation now/status quo? Say if you can't/don't renew through your previous bank, can the new bank not ask for a reappraisal? I kinda recall this happening in the news to some people with nonprime loans in Canada through institutions that were not the big five banks.

Could be wrong though.

[ranchlandsselling]

Originally Posted by chemgear

Isn't that the situation now/status quo? Say if you can't/don't renew through your previous bank, can the new bank not ask for a reappraisal? I kinda recall this happening in the news to some people with nonprime loans in Canada through institutions that were not the big five banks.

Could be wrong though.

As long as it's not over 95% it isn't a problem. This issue comes with having an appraisal done. The house might be 105% LTV but the other lenders will often use purchase price as the valuation leaving the borrower onside to continue as is. Some might see a problem with that, but the borrower likely already has CMHC or GE insurance, a good repayment history and DSC that's totally reasonable. It's not their fault the value went down and they're paying their mortgage and commited to the place.

I've done a few switches at renewal where the borrower will likely in the 95-105% LTV. Bank sends a renewal letter that's in between current best rates and posted rate. Something like 4.25% for a 5-year. I've taken them elsewhere for whatever 3.29% is available at the time. If every lender demanded an appraisal at renewal some of these people would ahve to go back to their bank. Who knows what the bank would say in these situations?